Correlation Between Jakarta Setiabudi and Obm Drilchem

Can any of the company-specific risk be diversified away by investing in both Jakarta Setiabudi and Obm Drilchem at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jakarta Setiabudi and Obm Drilchem into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jakarta Setiabudi Internasional and Obm Drilchem PT, you can compare the effects of market volatilities on Jakarta Setiabudi and Obm Drilchem and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jakarta Setiabudi with a short position of Obm Drilchem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Setiabudi and Obm Drilchem.

Diversification Opportunities for Jakarta Setiabudi and Obm Drilchem

-0.37

Correlation Coefficient

Jakarta Setiabudi  Obm Drilchem

Very good diversification

The 3 months correlation between Jakarta and Obm is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Setiabudi Internasiona and Obm Drilchem PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Obm Drilchem PT and Jakarta Setiabudi is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jakarta Setiabudi Internasional are associated (or correlated) with Obm Drilchem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Obm Drilchem PT has no effect on the direction of Jakarta Setiabudi i.e., Jakarta Setiabudi and Obm Drilchem go up and down completely randomly.

Pair Corralation between Jakarta Setiabudi and Obm Drilchem

Assuming the 90 days trading horizon Jakarta Setiabudi Internasional is expected to generate 5.85 times more return on investment than Obm Drilchem. However, Jakarta Setiabudi is 5.85 times more volatile than Obm Drilchem PT. It trades about 0.3 of its potential returns per unit of risk. Obm Drilchem PT is currently generating about -0.04 per unit of risk. If you would invest  188,000  in Jakarta Setiabudi Internasional on September 15, 2024 and sell it today you would earn a total of  892,000  from holding Jakarta Setiabudi Internasional or generate 474.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Jakarta Setiabudi Internasiona  vs.  Obm Drilchem PT

Jakarta Setiabudi

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Setiabudi Internasional are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Setiabudi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Obm Drilchem PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Obm Drilchem PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Obm Drilchem is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Jakarta Setiabudi and Obm Drilchem

The main advantage of trading using opposite Jakarta Setiabudi and Obm Drilchem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Setiabudi position performs unexpectedly, Obm Drilchem can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Obm Drilchem will offset losses from the drop in Obm Drilchem's long position.

The idea behind Jakarta Setiabudi Internasional and Obm Drilchem PT pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.